ACCC extends GRail decision deadline

Competition watchdog says no time like now to enter coal haulage business in the Hunter Valley

ACCC extends GRail decision deadline
ACCC chairman Rod Sims


The Australian Competition and Consumer Commission (ACCC) expects other players to enter the bid to acquire GRail, Glencore Coal’s rail business, to "enhance" competition in the market.

Releasing its statement of issues on Aurizon and Pacific National’s competing proposals, the competition regulator calls for more feedback from relevant stakeholders.

ACCC has also pushed its decision date in the matter to December 15.

ACCC notes that since Pacific National, which hauls the majority of the coal on the Hunter Valley rail network, and Aurizon, which hauls the next largest volume, introduction of a third party will be better for the market.

"The Hunter Valley coal haulage market appears to have high barriers to entry, so we would expect the addition of a third competitor to have a significant effect upon the market," ACCC chairman Rod Sims says.

"This has been supported by market feedback.

"In contrast, an acquisition by Aurizon or Pacific National would essentially be a continuation of the status quo where there are two active players in the Hunter Valley coal haulage market."

Sims adds that the region has seen "little or no entry" since Pacific National and Aurizon entered the haulage market and this is a unique opportunity for interested parties to enter the market.

"There are some examples of coal producers acquiring their own rolling stock, but Glencore Coal is the only Hunter Valley coal producer to have done so for a majority of its coal haulage requirements," he says.

"Glencore is now selling that rolling stock along with a long-term haulage contract.

"Coupled with the fact that Glencore Coal is the largest coal producer in the Hunter Valley, this is a platform for entry that is unlikely to be replicated in the foreseeable future.

"However, the ACCC also recognises that coal producers are generally well-resourced, sophisticated parties that may be able to protect their own interests, even if Aurizon or Pacific National acquires GRail.

"We are going to be exploring their ability to leverage competition between Aurizon and Pacific National or to bypass both haulage providers by acquiring their own rolling stock or by sponsoring new entry."

The Consumer Commission is inviting feedback from interested parties on its statement of issues on Aurizon and Pacific National proposals by October 21.

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